Italy’s president Giorgio Napolitano was probably looking forward to his Life Senator office where he would have been able to complete his long political career without much stress. However, following a week that saw the effective demise of Bersani and the PD party, and the ineffective attempts at finding a suitable candidate to succeed Napolitano, the president had to agree to be re-elected for a theoretical new 7-year term that would see him in the middle of his nineties at the end of the second term. After witnessing the resignation of a Pope after 600 years, Italians are now once more witnessing history in the making with the first time a president gets a second term.
However, after being the first president to be re-elected for a second term, Mr Napolitano picked Mr Letta to be the second youngest Prime Minister in history. Mr Letta comes from the ‘right’ wing of the left leaning Democratic Party and certainly has a back corridor connection to Berlusconi through his uncle, Gianni Letta.
Many international investors are asking, ‘what’s going on in Italy?’ In simple terms, Italy is going through a sophisticated ‘Italian spring’. With one out of four voters opting for Grillo, Italians have shown to the politicians that they mean business. The old equilibrium no longer works. Political parties are totally discredited, and the PD has basically imploded. There are now two scenarios in front of Italy. The first one sees Letta succeeding in implementing reforms in labour markets and the election system, which will allow for new elections late next year. The second would see a failure of Mr Letta who could fall on Berlusconi’s legal troubles which could still prompt him to leave the government. This would be a disastrous scenario as it would play straight into Grillo’s hands, who is already beginning to lose support. The next 3 months will be key.